Correlation Between Federated Short and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Federated Short and Lord Abbett at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Federated Short and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Short Term Income and Lord Abbett Health, you can compare the effects of market volatilities on Federated Short and Lord Abbett and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Federated Short with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Short and Lord Abbett.
Diversification Opportunities for Federated Short and Lord Abbett
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Federated and Lord is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Federated Short Term Income and Lord Abbett Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Health and Federated Short is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Federated Short Term Income are associated (or correlated) with Lord Abbett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lord Abbett Health has no effect on the direction of Federated Short i.e., Federated Short and Lord Abbett go up and down completely randomly.
Pair Corralation between Federated Short and Lord Abbett
Assuming the 90 days horizon Federated Short Term Income is expected to generate 0.14 times more return on investment than Lord Abbett. However, Federated Short Term Income is 7.11 times less risky than Lord Abbett. It trades about 0.06 of its potential returns per unit of risk. Lord Abbett Health is currently generating about -0.01 per unit of risk. If you would invest 847.00 in Federated Short Term Income on September 12, 2024 and sell it today you would earn a total of 4.00 from holding Federated Short Term Income or generate 0.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Short Term Income vs. Lord Abbett Health
Performance |
| Timeline |
| Federated Short Term |
| Lord Abbett Health |
Federated Short and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Short and Lord Abbett
The main advantage of trading using opposite Federated Short and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Short position performs unexpectedly, Lord Abbett can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Lord Abbett will offset losses from the drop in Lord Abbett's long position.| Federated Short vs. Federated Hermes Mdt | Federated Short vs. Federated Mdt Large | Federated Short vs. Federated High Income | Federated Short vs. Federated Hermes Sdg |
| Lord Abbett vs. Vanguard Health Care | Lord Abbett vs. Vanguard Health Care | Lord Abbett vs. T Rowe Price | Lord Abbett vs. T Rowe Price |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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